Who is the bloated LED industry behind the investment bubble?

[High-tech LED news / reporter Tang Guirong] On October 8, just after the National Day holiday, Shenzhen Shiyan came to an amazing news. Shenzhen Dingli Optoelectronics Co., Ltd., which was once rated as one of the top 10 LED display companies in China. Chairman Mao Xiaosheng suddenly disappeared, leaving employees, suppliers and various loans nearly 100 million yuan. The collapse of the company, the slogan of Mao Guosheng, and the huge amount of arrears caused widespread concern in the LED industry and the whole society.

In the process of high-tech LED reporters following the report of the Duoli incident, it was discovered that Mao Guozhen has signed project investment agreements with local governments and development zones in Sichuan, Hubei, Hunan and Jiangsu in recent years, and wants to establish multiple production bases. The products involve the middle and lower reaches of the LED industry chain, which can be described as the gathering place of LED products (see Table 1).

Table 1: The investment and completion of the project in the past two years

However, in areas such as Jiangsu and Sichuan where the national LED investment attraction is hot, Duo Duo suddenly fell down. Some sources pointed out that there are not many money to make money, but Mao Guojun’s ambition is great. Blind expansion and lending, when corporate performance can not support a large scale of investment, once the funds are short, bankruptcy is inevitable.

According to the reporter, in recent years, the development prospects of the domestic LED industry have been favored by more and more people, and the scale of future output value has been infinitely magnified, leading to the investment bubble.钧多立 is just a microcosm of the false prosperity of the LED industry, and it is also a victim of the frantic investment of local governments.

“The government advocates the development of the LED industry. The starting point is good. The LED industry needs to be promoted by the government in order to be developed. However, in the implementation process of local governments, when implementing a certain project, it is a problem.” Baishi Optoelectronics Design Director Zhang Longkai said in an interview with Gao Gong LED reporter. Local governments support industrial development, enthusiasm for investment, and administrative intervention in the market, which inevitably leads to overheating of the industry. At the same time, some individuals and enterprises are also using the enthusiasm of the government to maliciously spend money.

Blind investment in violation of market rules
In the past two years, many provinces and cities across the country have set off a round of LED investment promotion boom. Local governments are rushing to hold investment promotion conferences in coastal LED industry clusters such as Guangdong and Fujian, with large equipment subsidies and preferential taxation. And land resources and other conditions to attract enterprises to settle investment.

According to the statistics of the High-tech LED Industry Research Institute (GLII), in 2010, the investment in China's LED industry contracted plan was 217.885 billion yuan, a year-on-year increase of 248.6%. "Despite the rapid growth of domestic LED output in recent years, the LED industry has too many foam components. Many governments have planned LED optoelectronic industrial parks in local development zones, which will undoubtedly further create a bright future for entities and some investors." Zhang Kailong said frankly.

In recent years, in the development of some emerging industries in China, the government is more or less the biggest driver of industrial investment overheating. The famous economist Lang Xianping once analyzed that there is also a competitive relationship between the local governments, but this kind of competitive relationship is from the perspective of the local government, rather than from the perspective of industry development. Zhang Longkai also said that local governments are mainly based on local GDP as a condition. The more companies invest, the higher the local GDP value will be, and the better the government performance will be.

Therefore, at present, China's LED companies have not produced ultra-large enterprises with international competitiveness such as Philips, Nichia, and Osram, and have not formed an industrial scale advantage to cope with competition in the international market. According to GLII statistics, there are currently more than 3,000 LED SMEs in Guangdong Province alone. This also shows that the domestic LED companies are scattered and scattered, and the weak competition is not concentrated.

"The better the preferential conditions are given, the company will consider investing there," said a person in charge of a domestic LED project in Fujian to Gao Gong LED reporter. It is understood that in order to develop LED optoelectronics, various localities have proposed preferential policies to attract investment from enterprises. And many of these investment projects have the phenomenon of encircling the money.

According to the survey of high-tech LED reporters, this phenomenon exists in many cities such as Hunan, Jiangxi, and even the whole country. Many companies that invest hundreds of millions of dollars use this method. "LED projects are investing hundreds of millions, billions, no projects, so much money from enterprises, are virtual output values," Wang Shuixian, general manager of Dongguan Kunshuo Electronics Co., Ltd., is so ridiculous.

Zhang Longkai analyzed to reporters that the mutual competition of local governments will inevitably lead to vicious competition in the industry and encourage blind investment by enterprises. Such blind investment may be small in some places, but if the investment is more, it will be more serious and cause bubbles. .

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